The 6-Month Karachi Inter-Bank Offered Rate (KIBOR), a benchmark for lending to consumers and businesses, fell by 33 basis points (bps) on a day-on-day (DoD) basis as this week’s drizzling domestic bond performance convinced market players that the central bank would finally bring the benchmark policy rate below 22 percent.
According to the State Bank of Pakistan (SBP) data, the 6-month KIBOR clocked in at 20.98 percent, the lowest since March 2023, after the mid-week secondary market auction which saw the government raise Rs. 283 billion debt at rates below the central bank’s policy rate.
The other widely used 3-Month KIBOR was down 26 bps and was recorded at 20.98 percent. The 1-year KIBOR slid by 37 bps to 21.14 percent.
This week’s T-bill auction saw a declining trend where the rate on the 3-month paper went down to 20.99 percent on Wednesday.
Yields on the 6-month and 12-month papers dropped down to 20.96 percent and 20.84 percent, respectively.
Besides the Rs. 66.44 billion debt raised via competitive bidding, the government raised Rs. 216.80 billion through non-competitive bids, taking the total amount raised during the auction to Rs. 283.23 billion.
It bears mentioning that lower lending rates are good in particular for private-sector credit. Subsequently, the expected fall in SBP interest rates this year will likely help the government reduce the hefty cost of servicing its domestic debt.
